Congress Passes $2 Billion Extension of 'Cash for Clunkers' Program

Senators voted 60 to 37 tonight to give the "Cash for Clunkers" program an emergency $2 billion refill.

The vote on Capitol Hill saves the program, which gives car buyers between $3,500 and $4,500 to trade in their older cars, trucks and SUVs for newer, more fuel-efficient ones. The old cars have to be destroyed.

The bill to save the clunkers program withstood six amendments on a variety of issues. Any of them would have killed the program for the summer. The House had passed the emergency refill before its members left town last week.

Proponents said the program helped the environment and stimulated the economy. Opponents said it was a bailout the taxpayers can ill afford.

While a boost for car dealerships, some lawmakers have argued that it is not helping U.S. automakers specifically. Six of the top 10 selling cars under the program are made by foreign manufacturers.

"Our CARS trade-in program has been a lifeline to the American auto industry by boosting the manufacturers, keeping dealerships in business, saving the workers' jobs and helping Americans buy cars," Department of Transportation Secretary Ray LaHood wrote on his blog. "There's no doubt in my mind that this program has been a wild success."

Cash for Clunkers a Boost to the Economy?

DOT estimates that the program has generated more than 184,000 transactions worth $775.2 million. But many more transactions remain in the pipeline, not yet claimed.

Auto sales have exploded, thanks to the incentives. Edmunds.com reports that at the current sales pace, if sustained for the entire year, 19.6 million vehicles would be sold, beating the record of 17.4 million sold several years ago.

Edmunds.com also estimated that people trading in their wrecks were benefiting financially as well. It estimated that the average value of the clunkers was $1,475. The program awards buyers vouchers worth $3,500 or $4,500 for each qualifying car traded in.

Last week, House members supportive of the program touted its benefits to the economy, a sentiment echoed by LaHood this week.

"This is the one stimulus program that I believe as has been the most popular because the money gets out quickly," LaHood said. "The car purchaser gets the money in the form of a rebate, the car dealer sells automobiles, car salesmen are flooded with people trying to buy automobiles and so, this is an extraordinary way to really give a boost to our economy."

"It's still a horrible policy," Sen. Jim DeMint, R-S.C. said in a CNBC interview today. "There's always unintended consequences that we get into here when we think we can plan the whole economy. It's going to do a lot more harm than good."

Other critics questioned the government's help to the auto industry.

"Why not $4,500 for refrigerators or other businesses around my state?" asked Sen. Claire McCaskill, D-Mo. "So I just think that we have to be careful that we don't go too far with this program."

Some Republicans said the government needs to stay out of the sector altogether.